DOJ Opinion No. 034, s. 1993

DOJ OPINION NO. 034 , s. 1993 March 17, 1993 Acting Secretary Romeo L. Bernardo Department of Finance Manila Sir : This has reference to your request for opinion as to whether the tax-free benefits of the Home Insurance & Guaranty Corporation (HIGC) relative to its guarantee over its receivables is extendible to investors in its proposed Asset-backed Securities (ABS). dctai You state that the HIGC has requested your Office for such exemption on the basis of Section 15 of Executive Order No. 535, which provides: "Subject to the approval of the President of the Philippines upon consultation with the Minister of Finance, the tax exemptions granted in favor of lending institutions under Sec. 25[c] of the Home Financing Act, as amended, shall likewise extend to mortgages held by other entities and persons which are insured under the mortgage insurance program of the corporation." The cited Section 25[c] of the said Home Financing Act (R.A. No. 580, as amended) reads: "Sec. 25. Amendatory Provisions . xxx xxx xxx C. Interests accumulated by lending institutions on mortgages insured under the provisions of the Home Financing Act shall be exempt from all taxation." Accordingly, an ABS will represent an undivided interest in the Trust Fund consisting of a pool of balances on the mortgages and/or installment receivables originated by HIGC and conveyed to the Fund without recourse including all rights to receive collections on the receivables in the said Fund. Specifically, your query is whether or not Section 15 of E.O. No. 535 is applicable to the earnings of the ABS considering that (1) the ABSs are not mortgages nor do they generate mortgages, and (2) the issuer of ABSs is the Trust Fund and not the HIGC. We are constrained to refrain from expressing our views on the issue raised herein. It is noted that the Office of the President, thru the Executive Secretary, had already passed upon the aforesaid HIGC request and had adopted a definitive ruling denying the same (copy enclosed). Any opinion or comment that this Department may render thereon would be tantamount to reviewing the action of the Office of the President. The Secretary of Justice has no revisory authority over the rulings of the Office of the President and it would be improper to reexamine the position taken unless said Office requests our opinion on the same question (Sec. of Justice Opn. No. 150, s. 1988; No. 164, s. 1990). prcd Very truly yours, (SGD.) FRANKLIN M. DRILON Secretary